2021 S02 PGE M1 FIN 0001 E L BOD
Transcript of 2021 S02 PGE M1 FIN 0001 E L BOD
2021_S02_PGE_M1_FIN_0001_E_L_BOD
CORPORATE FINANCE
Semester 2, 2020 – 2021
COORDINATOR Frantz MAURER
PROFESSORS Jeanne METIVIER
OFFICE 23
TELEPHONE +33 (0)556 845 573
E-MAIL [email protected]
OFFICE HOURS By appointement
COURSE DELIVERABLE DUE DATE WEIGHT ON FINAL GRADE
Final Exam (Individual) Session 10 100%
Kedge Business School and its professors, encourage you to use your Pro-Acts, company projects and internships as privileged opportunities to apply the reflexions, theories, concepts and tools presented during this course
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INTRODUCTION AND OBJECTIVES
Course Purpose & Objectives
This course is designed to provide students with a practical approach to the main corporate
financial decisions. The philosophy of this course may be summarized in the following
statement: "Bridging theory and practice". Case studies in corporate finance provide the
reality of financial decision making. That explains why case study-based teaching is used
here.
The great interest of case-based classes is to challenge students by bringing them as close
as possible to corporate finance decision-making situations of the real world. As such, they
provide financial management lessons that students can put into practice in their
professional lives.
Specifically, this course revolves around the implication of the main strategic financial
decisions on the value of the firm:
- Estimating the cost of capital
- Valuing projects and stocks
- Raising new funds to undertake investments
- Returning cash to shareholders
- Signaling with payout policy
Courses contribution to program objectives
KM1. Understand and Integrate Core Management Disciplines
Money is probably the only raw material used by any business in any industry. All
managers regularly spend money, whatever their area of responsibility. An understanding
of why and how financial decisions are made is thus essential. The focus of this course is
to show every student how to "think finance". To be successful, students need to master the
core concepts and learn to identify and solve problems that financial managers face. The
focus of this course targets the KM1 learning goal in a most relevant manner.
KM8: Provide Value to the Business Community in a chosen Area of Specialization
The value of economic profit is to remind managers that they have not really made a profit
until they have earned an economic return on the capital they use. This simple intuition is a
powerful and useful tool in financial decision making. By relying on it, future financial
managers can avoid the bad decisions. At the heart are the essential intellectual tools
students need to differentiate between good and bad decision making. In this sense, this
course contributes to the KM8 learning goal without doubt.
Course Contribution to Application of Critical Thinking
The case method immerses students into realistic business situations and places them in the
role of the decision maker. There are no simple solutions. Through the dynamic process of
exchanging perspectives, countering and defending points, and building on each other's
ideas, case studies stimulate students’ thinking and encourage discussion. As a result,
students become adept at analyzing issues and exercising judgment.
Courses description
Evaluating financial health – Cost of capital – Business valuation – Investment decision
techniques – Initial Public Offerings (IPO) – Capital increases (SEO) – Capital structure
policy – Share Buybacks – Dividend policy – Value creation.
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COURSE MATERIAL
All course material (case studies, slides, Excel spreadsheets, and exercises) is available on
KedgeBS LEARN and should be downloaded before each corresponding session.
Textbooks
1. Berk, J., and DeMarzo P. (2017), Corporate Finance, 4th edition, Pearson. Available at
the campus library La Ruche.
eBook (edition 2016) available on Dawsonera via the campus library La Ruche
website: https://library.kedge.edu.
2. Vernimmen, P., Quiry, P., Dallocchio, M., Le Fur, Y., & Salvi, A. (2018). Corporate
Finance, Theory and Practice, 5th edition. John Wiley & Sons. Available at the campus
library La Ruche.
eBook (edition 2017) available on Dawsonera via the campus library La Ruche
website: https://library.kedge.edu.
Websites
1. The Corporate Finance Handbook by Berk and DeMarzo (see Textbooks above) is
available with MyFinanceLab at www.myfinancelab.com, a fully integrated homework
and tutorial system.
MyFinanceLab provides Online Assessment Using End-of-Chapter Problems. The values in the
problems are algorithmically generated, giving students many opportunities for practice and
mastery.
2. The Corporate Finance, Theory and Practice Handbook by Vernimmen et al. (see
Textbooks above) is available with the Vernimmen’s website at www.vernimmen.com.
It provides:
- Tools: formulas, tables, statistics, lexicons, glossaries, financial figures for more than
16 000 European and North American listed companies.
- Resources that supplement the book: an Excel file providing detailed solutions to all of the
problems set in the book: summaries of recent and interesting research papers, articles,
prospectuses of financial transactions, thesis topics, and thematic links.
- Problems, case studies, quizzes for testing and improving your knowledge.
SUPPLEMENTARY READINGS
The Vernimmen.com Newsletter. This letter is sent out free of charge via the Internet
every month to those who have subscribed on www.vernimmen.com. It provides:
- A conceptual approach to a current corporate finance topic.
- Statistics and tables that updates the data in the book Corporate Finance, Theory and
Practice (see Textbooks above), and which you may find useful in your daily practice of
corporate finance.
- A review of an article on financial research, with a concrete dimension.
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COURSE CONTENTS AND TIMETABLE
SESSIONS TOPIC PRELIMINARY READING(S AND
ASSIGNMENTS ADDITIONAL READING(S) AND
ASSIGNMENTS
Session 1 (2 x 1h30)
Financial Statements
Read:
Slides dealing with topic of
“Financial Statements”
Session 2 (2 x 1h30)
Financial and Stock Market Analysis
Read:
The case study untitled
“Carrera” and course slides
dealing with Financial and
Stock Market Analysis
To be done: Exercises dealing with “Stock Market Analysis”
Session 3 (2 x 1h30)
Seasoned Equity Offering (SEO)
Read:
The case study untitled
“Toyota” and course slides
dealing with topic of SEO.
Session 4 (2 x 1h30)
Valuation of equity and Initial
Public Offering (IPO) – Part I
Read:
Slides dealing with topic of “Time Value of Money”
To be done:
Exercises dealing with “Time Value of Money”.
Session 5 (2 x 1h30)
Valuation of equity and Initial Public Offering (IPO) – Part II
Read:
The case study untitled “NetLedger” and slides linked with topic of IPO.
Session 6 (2 x 1h30)
Internal Financing, Dividend Policy, Share Buyback
Read:
The case study untitled “Nike”
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and slides linked with topic of Share Buyback.
Session 7 (2 x 1h30)
Capital Budgeting Decisions – Part I
Read:
The case study untitled “Wee infant milk formula” and slides linked with topic of Capital Budgeting Decisions.
Session 8 (2 x 1h30)
Capital Budgeting Decisions – Part II
Read:
The case study untitled “Capital Budgeting: Applications of Investment Decision Techniques”
Session 9 (2 x 1h30)
Mentoring session
Session 10 (3h)
Final Exam
CASE STUDIES IN CORPORATE FINANCE
TEACHING APPROACH/ INSTRUCTIONAL METHODS
A Word of Advice
This course is mainly dedicated to students who have a background in Corporate Finance.
Specifically, to really benefit from this course, students should know some basics
about:
1- Discounting.
2- Financial statements of a company (balance sheet, income statement, cash flows
statement).
3- Profitability, efficiency, and liquidity ratios.
4- The Weighted Average Cost of Capital (WACC) concept and measurement.
5- The Capital Asset Pricing Model (CAPM).
6- The key parameters used in analyzing stocks (Price to Book ratio, Price/Earnings or
P/E ratio, dividend yield per share, payout ratio).
7- The Net Present Value (NPV) decision rule.
8- The efficiency of financial markets.
Organization of the sessions
To get the most out of cases, students must read and reflect on the case study, and should
meet in working teams before class to discuss their findings with other classmates. This
classroom interaction is enriched by classmates from diverse backgrounds and experiences.
This requires students and the professor to work closely together.
Students place themselves in the role of the decision maker. In class under the
questioning and guidance of the professor students perform the necessary analysis, probe
underlying issues, and compare different alternatives.
Individual Assignments
Final Exam (100% of the final grade). The final exam is scheduled for three hours.
Typically, the format of the final exam includes multiple-choice quizzes (MCQ), and/or
binary-choice quizzes (Right or Wrong), and/or numerical exercises to be solved, and/or
questions based on a case study.
Group work
Non Applicable
EVALUATION OF STUDENT PERFORMANCE
The overall objective is to test the students' understanding of corporate finance. To put it differently, the aim of the individual assignment (final exam) is to check whether students have improved their ability to "think finance".
DELIVERABLE %
Final Exam (written) 100
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Methods Used to Evaluate Student Performance
Individual Assignments (100%)
Assessment Criteria
Rubric Below Requirements
Meets Requirements
Exceeds
Requirements
Reasoning (1/3)
Unable to put the
financial reasoning
and judgment into
practice
Make the right
financial decision in
70 to 80% of the
time
Make always the
right financial
decision
Understanding of core concepts
(1/3)
Misunderstanding of
the core concepts –
Wrong interpretation
of results or
statements
Interpret between
70% and 80% of the
results and/or
statements correctly
Interpret more than
80% of results
and/or statements
correctly
Calculation (1/3)
Unable to perform
calculations –
Misunderstanding of
the calculation
equations
Between 70% and
80% of calculations
are exact
More than 80% of
calculations are
exact
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Frantz MAURER
BIOGRAPHY
Frantz MAURER, PhD, is Full Professor of finance at KEDGE Business School. During the last 20 years, he has collaborated with different institutions such as the University of Bordeaux, ESCP Europe, and HEC Paris. Frantz has collaborated extensively with large financial institutions in the domain of risk management and the use of data and analytics to better predict crisis and abnormal situations. He is the author of several publications on risk management, which includes a Harvard Business School Industry and Background note.
Jeanne METIVIER
BIOGRAPHY
Jeanne METIVIER, PhD, is Assistant Professor of Finance and Economics at KEDGE Business School.
Her research activities focus on international trade and trade conflicts among members of the World Trade Organization. Jeanne has been involved in several impact assessments and ex post
evaluations for the European Commission as an Associate Researcher for CEPS. She publishes articles in peer-reviewed journals and acts as a reviewer for academic journals.
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ACADEMIC FRAUD
Definition
Academic fraud is a breach of ethics.
“Is achieved using unfair means or deception, to obtain material or undue moral
advantage, or with the intent to avoid the enforcement of laws”. (Translated from the original source: Dictionnaire Juridique des Lois, 2010, available at: www.dictionnaire-
juridique.com/definition/fraude/php)
Plagiarism consists of attributing authorship by (partial or total) copying, imitation
or misappropriation.
The act of fraud is committed by one or more students/participants when they:
appropriate written or oral work to themselves when they are not the author (in whole or in part) of the work, by omitting any references or quotations to the author or to the owner of the work;
present any data that has been falsified or invented in any way;
use the identity of the author, attributing the contents of and/or a resource to him/her, but without explicitly mentioning that they are not the author;
appropriate the creative work of someone else and present it as their own;
acquire exerts of texts, images, results etc. from external sources by including them in their own work without mentioning the origins of the exerts;
summarise the original idea of an author by expressing it in their own words but omit quoting the source;
cheat in an academic evaluation.
Plagiarism can occur in:
an academic article or book;
an exercise or a case study;
a study or a report;
a dissertation or a thesis;
any document of which the student/participant is not, but purports to be the author.
Sanctions
Any student/participant having committed academic fraud, or having participated in it, will be sanctioned by the professor in charge of the course. The professor can apply
1st and 2nd level sanctions (detailed below). The professor will send a copy of the sanction to the student’s/participant’s programme. The student/participant will be informed/and
or convoked by the programme director (or his/her representative) to a hearing prior to the possible convening of the Kedge Business School Disciplinary Council. In the case of a
hearing of the Disciplinary Council, they can decide to apply 3rd and 4th level of sanctions.
Any student/participant guilty of academic fraud will receive one of the following
sanctions:
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Applied by the professor in charge of the course, Kedge Business School faculty member (1st and 2nd level):
o A grade of zero for the work concerned and a formal warning;
o A grade of zero for the course or module concerned and a formal warning.
Applied by Kedge Business School’s Disciplinary Council (3rd and 4th level):
o Suspension from the programme for one or two semesters;
o Exclusion from the programme.
N.B.: Plagiarism within a partner institution can result in these sanctions being applied by
Kedge Business School, notwithstanding partner’s decision.